Nationwide lockdown sees record fall in employment and labour force participation as economic activity comes to a halt.

New Delhi: India’s unemployment rate in the last week of March and first week of April crossed 23 per cent, data from the Centre for Monitoring of Indian Economy (CMIE) showed Tuesday, in an indication of the economic fallout of Covid-19 and the subsequent 21-day lockdown announced on 24 March.

The massive rise in the weekly figures pushed the full-month unemployment rate upwards to 8.7 per cent in March — the highest in 43 months or since September 2016, said the CMIE.

The unemployment rate was at 7.7 per cent in February and 7.1 per cent in January.

The data reinforces anecdotal evidence of a halt in economic activity across manufacturing and services industry that has led to massive job losses and a migrant exodus from big cities. The worst hit have been workers in small industries and the construction and textile sectors, in services like hotels, restaurants and transportation, and daily wage labourers.

CMIE releases unemployment data on a monthly basis as well as on a daily moving average basis.

‘Worrisome data’

Mahesh Vyas, managing director and chief executive of CMIE, labelled the labour statistics for March “worrisome”.

“It is evident that there was a significant fall in employment and there is a simultaneous significant increase in unemployment in March 2020. And, this is what shows up in the rather sharp rise in the unemployment rate,” Vyas wrote in a note on the CMIE website.

“In March 2020, the labour participation rate fell to an all-time low, the unemployment rate shot up sharply and the employment rate fell to its all-time low… In March, the labour participation rate or the active workforce in a country that is either employed or is unemployed but actively looking for jobs fell below 42 per cent for the first time to 41.9 per cent, from 42.96 per cent in January,” he wrote.

Vyas added that the fall was a result of 90 lakh people moving out of the labour force, reducing it to 43.4 crore in March from 44.3 crore in January. The employment rate also fell to an all-time low of 38.2 per cent in the month. Business daily Mint first reported the numbers.

However, the CMIE chief cautioned that the sample size towards the end of March was marginally lower on account of state shutdowns and the subsequent nationwide lockdown. The sample size was nearly 84,000 as against an average sample size of 1.17 lakh.

‘Threat of Covid-19’

Pronob Sen, India’s former chief statistician and the chairman of a committee constituted by the Narendra Modi government on economic statistics, said the increase in unemployment was expected.

However, the improvement in the unemployment levels in the coming weeks will depend on how production gets unlocked, he said.

“At the moment, the bulk of the economy is under a shutdown. When it is lifted, many factors will come into play. How industries will ramp back production, whether workers who have gone back home will immediately come back? Besides this, fear will be another factor,” he said.

“Until the threat of Covid-19 recedes from people’s minds, there will be uncertainty,” added Sen.